Study highlights asset depletion in hospitals acquired by private equity

Editor's Note

Acquisition by private equity firms leaves healthcare facilities less equipped to care for patients, according to a recent study published in JAMA. NBC reported the news July 31.

Conducted by researchers from the University of California at San Francisco, Harvard Medical School, and Hunter College, this nationwide study is the first to explore the effects of private-equity ownership on hospital assets comprehensively, NBC reports. Findings reveal that within two years of acquisition, hospitals purchased by private-equity firms saw a 15% average decline in capital assets, including land, buildings, equipment, and IT infrastructure. In contrast, similar hospitals not acquired by private equity experienced a 9% increase, resulting in a net difference of 24%, or approximately $28 million in asset loss per hospital.

Depleting essential resources puts patient care at risk, experts told NBC. The outlet notes that the study's release coincides with the bankruptcy of Steward Health Care, a hospital chain previously owned by private equity, impacting 31 facilities. Cerberus Capital, its former owner, profited $800 million from its investment but faced criticism for selling the land under its hospitals, increasing operational costs.

Healthcare has been a major target of private equity investment in recent years, NBC reports, including more than $500 billion from such firms as Apollo Global Management and The Blackstone Group. In response to growing concerns, states like Indiana, California, and Connecticut are increasing scrutiny of private-equity transactions in health care, focusing on preventing patient harm and antitrust issues. For example, Indiana now mandates pre-transaction notifications for deals over $10 million.